Stocks Opened Higher After Europe Deal
Stock markets welcomed the news on Europe’s plan to tighten budget rules within the European Union and U.S. stocks gained on Friday, with the Standard & Poor’s 500 Index adding 1 percent. EU leaders agreed in Brussels to increase the EU’s crisis-fighting fund by $267 billion and introduce stricter anti-deficit rules to fight continuing debt crisis in Europe.
European Central Bank President Mario Draghi described the plan as “very good”, while Britain was not included in the new plan after the country decided not to join the newly introduced measures and refused to accept closer economic ties with other member states.
U.S. stock market was boosted also by better than expected figures on the U.S. trade deficit, which decreased by 1.6 percent to $43.5 billion in September.
Other leading U.S. stock indexes also rose, although the Dow Jones Industrial Average’s gain was limited by decreasing prices of DuPont shares. The index added 1.1 percent during early trading hours, while bank stocks led the gain, with Morgan Stanley adding 5.3 percent, and Citigroup Inc. increasing 4.6 percent. European stocks also rose following the news on a debt-crisis deal, with France’s CAC 40 gaining 2.5 percent, and Germany’s DAX adding 2 percent on Friday.
The new budget rules envisage a more active role for the European Central Bank, which is now allowed to purchase more government debt to lower borrowing costs for EU member states. Britain, not quite unexpectedly, opposed the plan designed by France and Germany, Europe’s leading economies, and asked the new rules not to apply to London. Other member states, however, did not accept Britain to be an exception to the rules, and London did not join the new budgetary policy framework.